Poverty, Programs, and Prices: How Adjusting for Costs of Living Would Affect Federal Benefit Eligibility

Public policies rarely account for regional differences in living costs across the country. Applying cost-of-living adjustments to measurements of economic wellbeing and eligibility standards for social programs in 98 central cities reveals that:

  • Federal poverty guidelines, often used to determine eligibility for social programs, change significantly when indexed for cost of living (COL) differences. Out of 38 large cities in higher-cost areas in the Northeast and West, 36 experience increases in the federal poverty guidelines. Conversely, more than half of the large cities located in lower-cost areas in the South and Midwest (38 of 60) see shifts in the opposite direction.
  • The percentage, number, and distribution of families that are considered poor under federal poverty guidelines would change dramatically in many central cities if regional differences in the cost of living were recognized. In high-cost areas on the East and West coasts, the poor population would increase substantially both in real and proportional terms. Cities like New York, NY and Los Angeles, CA rank among those with the greatest increases in both the number and proportion of poor families under COL-adjusted standards. However, cities in lower-cost areas of the South and West, such as El Paso, TX and Shreveport, LA, have among the largest declines in the number and share of poor families once living costs are taken into account.
  • Adjusting federal poverty guidelines for regional differences in the cost of living has a considerable impact on the number of families eligible for public programs. Overall, the share of families eligible for Early Head Start and Head Start as well as the National School Lunch Program would increase 29 percent in large cities across the country. San Francisco, CA, San Jose, CA, and Bridgeport, CT experience the largest increases in eligibility for these programs, while San Antonio, TX, Corpus Christi, TX, and El Paso, TX see the largest declines in the eligible population under COL-adjusted guidelines.

Measures such as the federal poverty guidelines provide more accurate perceptions of the relative economic wellbeing of populations across the country when they consider regional cost-of-living differences. To craft effective public policies and programs for low-income families throughout the United States, researchers and policymakers should give further attention to the impact that regional COL differences have on program eligibility standards. In particular, policymakers can employ COL-adjusted measures to determine where state and local policies are most needed to supplement federal assistance targeted to low-income families and individuals.